Covenant Logistics Group Inc. rolled up record profits last year as the Chattanooga-based trucking giant capitalized on the improved freight market to boost revenues by nearly 25% to more than $1 billion.
The company, which trimmed its fleet and lost $47.2 million during the early part of the pandemic in 2020, bounced back in 2021 and reported Wednesday net income for all of 2021 of $60.7 million, $3.57 per share.
The former Covenant Transport rebranded itself last fall as Covenant Logistics and reported Wednesday fourth-quarter net income of $17.7 million, or $1.05 per share. Earnings, adjusted for one-time gains and costs, were $1.07 per share.
Covenant Chairman and CEO David R. Parker said he was pleased with the results, which reflected a 13% return on average invested capital, and announced the company is initiating a quarterly cash dividend of 6.25 cents per share in the first quarter of 2022.
“We experienced the continuation of an exceptionally strong freight market resulting from growing economic activity, low inventories and supply chain disruptions, accompanied by constrained capacity due to a national driver and equipment shortage,” Parker said in a statement Wednesday night about the results. “We were also successful in moving assets to longer term customer arrangements, lowering our asset intensity and reducing our debt. We look forward to building on these results in the coming quarters, and the quarterly dividend we are announcing today is an expression of our confidence in the future.
Parker said Covenant’s expedited and dedicated freight operations contributed about 58% of total revenue in the fourth quarter “and performed well in an environment characterized by strong freight demand, an extremely competitive driver market, workforce volatility due to COVID-19 and rising costs.”
Salaries, wages and related expenses increased year-over-year by $9.8 million, or 23 cents per mile. Parker reported that driver pay increased by $6 million last year, or 15 cents per total mile, “due to significant increases implemented across both our expedited and dedicated fleets, and wage hikes for our shop technicians added another 1 cent per mile.”
Covenant reported its quarterly and yearly income results after the market closed Wednesday. Shares of Covenant Logistics are up 39.3% from a year ago, but the stock price of Covenant still closed Wednesday down 17.3% from where the stock was trading at the start of 2022.
– Compiled by Dave Flessner